Stocks surge on relief over unemployment, banks

NEW YORK -- Stocks soared Friday as Wall Street cheered the positive news it had been hoping for: Job losses slowed in April and big banks don't need as much capital as some had feared.

All the major indicators rose more than 1%, including the Dow Jones industrial average, which jumped 165 points.

Bank shares helped drive the gains following the release of the government's stress tests late Thursday. Energy stocks surged as oil prices jumped on the improving economic outlook.

Wall Street welcomed the Labor Department's report that employers cut 539,000 jobs last month — the fewest in six months and much less than the 620,000 analysts had expected.

The jobs report also said the unemployment rate climbed to 8.9% — the highest since 1983 — from 8.5% as many businesses refrained from hiring amid an uncertain economic outlook.

"The news is never all good when you've hit bottom," said Alan Skrainka, chief market strategist at Edward Jones. "But that doesn't change our view that the rate of decline is slowing."

The Dow rose 164.80, or 2%, to 8,674.65. The Standard & Poor's 500 index rose 21.84, or 2.4%, to 929.23, and the Nasdaq composite index rose 22.76, or 1.3%, to 1,739.00.

For the week, the Dow was up 4.4% for the week and is down only 2.3% for 2009. It was the eighth gain for the index in nine weeks. The S&P 500 index was up 5.9% for the week and 2.9% for the year, while the Nasdaq composite index was up 1.2% and is up 19.3% YTD.

The market has been surging since the Dow and the S&P 500 index hit 12-year lows on March 9. The S&P 500 index is up 37.4%, while the Dow is up 31% as worries about bank failures ease and following better-than-expected economic data on housing, manufacturing and other key parts of the economy.

Investors also were relieved that the results of the government's "stress tests" of the 19 largest U.S. banks were not worse than anticipated. Ten of them will need to raise about $75 billion in new capital as a buffer against losses if the economy worsens.